The former imam of a controversial community center and mosque near Ground Zero in New York City is being sued for $25 million for allegedly embezzling millions of dollars in donations to fund a lavish lifestyle that included trips, a female friend and a fancy car.

According to a lawsuit filed Monday in a Manhattan court, suburban businessman Robert L. Deak and his wife Moshira Solimon say they donated $167,000 to help Imam Feisal Abdul Rauf fund "The Shariah Index Project", a project aimed at combating anti-Islamic sentiment, but that Abdul Rauf spent the money "for his personal use."

The new filing alleges the funds intended for "the Shariah Index Project" were instead spent by Abdul Rauf and his wife Daisy Khan on "a luxury sports car, personal real estate, entertainment, [and] lavish trips," as well as Abdul Rauf's "vacations with Evelyn Adorno and support of Evelyn Adorno."

The suit also alleges that Abdul Rauf accepted $3 million from the Malaysian government on behalf of one of his non-profit organizations, the Cordoba Initiative, embezzled the money and failed to report the donation in the organization's tax returns over three years between 2008 and 2010.

Deak and Solimon are asking for $25 million in punitive damages.The suit is the latest salvo in an ongoing legal dispute, coming 18 months after Abdul Rauf and his wife sued Deak and Solimon over a real estate deal gone bad.

In a statement Deak and Solimon's attorney, Jonathan Nelson, said his clients were "shocked and disappointed that their generosity and philanthropy have been preyed upon by Rauf and that their gifts were used for his own personal enjoyment."

Abdul Rauf and Kahn did not immediately respond to requests by ABC News for comment. In a statement to the New York Times they denied all the allegations in the suit. "The lawsuit is meritless and it will be vigorously defended in New York court," they said.

The Malaysian embassy in Washington and the consulate in New York did not respond to requests for comment.

Abdul Rauf and Kahn sued Deak in federal court in August 2011, accusing him of selling them a condominium in Washington, D.C. at an inflated price. The suit has not been settled.

Abdul Rauf was the public face of Park51, the community center and mosque that elicited both intense opposition and support for its proposed location two blocks from the former site of the World Trade Center, which was destroyed by terrorists on 9/11.

Abdul Rauf fell out with the project's developer before an interim version of the center opened in September 2011. The proposed Park51 building has not yet been built.